California Drug Clinic Operator Convicted in $3 Million Kickback Scheme

A California man who operated addiction treatment facilities in Orange County was convicted this week of paying nearly $3 million in illegal kickbacks for referrals of patients to his facilities, according to federal prosecutors.

From at least October 2018 until December 2020, the man, Casey Mahoney, 48, of Los Angeles, paid about $2.87 million to “so-called ‘body brokers’” who gave thousands of dollars to patients to coax them into Healing Path Detox L.L.C. in Huntington Beach and Get Real Recovery Inc. in San Juan Capistrano, two treatment centers Mr. Mahoney operated, the U.S. Attorney’s Office for the Central District of California said in a statement on Friday.

Some of the money that the body brokers gave to patients was used by the patients to buy drugs, the department’s statement said.

After a nine-day trial, a federal jury in Los Angeles found Mr. Mahoney guilty on Wednesday of one count of conspiracy related to offering illegal remunerations for patient referrals, seven counts of illegal remunerations for patient referrals and three counts of money laundering, prosecutors said. He was acquitted on one count of aiding and assisting the preparation of a false tax document.

The money-laundering charges, the most serious on which Mr. Mahoney was convicted, each carry a maximum sentence of 20 years in prison. Sentencing is set for Jan. 17, 2025.

Treatment facility operators may pay a group like a marketer or an advertiser to promote their services to patients. But the Eliminating Kickbacks in Recovery Act of 2018 prevents the operators from paying body brokers kickbacks based on how much revenue the patients they referred brought in, as Mr. Mahoney did, according to the indictment.